§ 123.8. Offset for pension benefits generally.
(a) Workers’ compensation benefits otherwise payable shall be offset by the net amount an employe receives in pension benefits to the extent funded by the employer directly liable for the payment of workers’ compensation.
(b) The pension offset shall apply to amounts received from defined-benefit and defined-contribution plans.
(c) The offset may not apply to pension benefits to which an employe may be entitled, but is not receiving.
(d) In calculating the offset amount for pension benefits, investment income attributable to the employer’s contribution to the pension plan shall be included on a prorata basis.
Notes of Decisions Defined Benefit Pension
Employer who petitioned for modification of claimant’s workers’ compensation benefits by offset against its workers’ compensation obligation due to claimant’s receipt of disability pension was entitled to present expert actuarial testimony to establish extent employer funded claimant’s defined benefit pension; claimant’s disability benefit was not based on contributions by either the employer or employee but by factors known only at retirement including length of employment, final average salary, and retirement age, and employer’s contribution could only be determined by an actuarial formula. Pennsylvania State University v. Workers’ Compensation Appeal Board (Hensal), 911 A.2d 225, 229—230 (Pa. Cmwlth. 2006).
Public employer, who filed notice of compensation offset claiming a portion of claimant’s workers’ compensation award was subject to an offset due to claimants’ receipt of a disability pension under a defined benefit plan, was entitled to an offset based on expert actuarial testimony to establish amount of the requested offset where workers’ compensation judge found that employer’s actuarial evidence was credible. Department of Public Welfare v. Workers’ Compensation Appeal Board (Cato), 911 A.2d 241 (Pa. Cmwlth. 2006).
Pension Offset
Workers’ Compensation Judge correctly used expert actuarial opinion to establish employer’s contribution to employee’s retirement annuity to determine amount of credit employer could claim against employee’s workers’ compensation benefit. Department of Pub. Welfare v. Workers’ Compensation Appeal Board (Harvey), 960 A.2d 957, 964—965 (Pa. Cmwlth. 2008).
Where there is a defined-benefit plan, an employer cannot meet its burden of establishing the amount of its offset for workers’ compensation award absent actuarial testimony. City of Philadelphia v. Workers’ Compensation Appeal Board (Andrews), 948 A.2d 221 (Pa. Cmwlth. 2008).
Employer may take a credit for workers’ compensation claimant’s receipt of pension benefit in defined-benefit and defined-contribution plans to the extent it funded those benefits; employer’s right to a pension offset no longer turns on whether the pension constitutes payments in lieu of compensation, nor does it matter that the pension is a service-connected disability pension. City of Philadelphia v. Workers’ Compensation Appeal Board (Andrews), 948 A.2d 221 (Pa. Cmwlth. 2008).
Cross References This section cited in 34 Pa. Code § 123.1 (relating to purpose); and 34 Pa. Code § 123.5 (relating to offset for benefits already received).
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